The Direct Method of Reporting Cash Flows from Operating Activities

question 107

True/False

The direct method of reporting cash flows from operating activities involves reporting major classes of cash receipts and cash payments.

---

Definitions:

Rental Income

Income received from renting out property or real estate, which is typically subject to income tax.

Schedule C

A form used by sole proprietors to report their business income and expenses to the IRS.

Flow-Through Entities

Business structures where income passes directly to the owners or investors, avoiding corporate income tax.

Intangible Property

Refers to non-physical assets owned by a business or individual, such as patents, trademarks, copyrights, and business goodwill.